If firms believe that a downturn in sales and output is temporary and that increased output will be needed in the future, they may choose to

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If firms believe that the downturn in sales and output is temporary, then firing all their workers, selling off the plant or closing it permanently would not be a wise decision as it would lead to significant costs and disruption when demand increases again. The best choice in this scenario would be to reassign their workers to different jobs or departments within the firm, which would allow the firm to retain its skilled workers and maintain its production capabilities.

If Firms Believe That a Downturn in Sales and Output